Inside Trader`s Real Motive Is Not Greed

LOUIS RUKEYSER

March 27, 1987|By LOUIS RUKEYSER, Tribune Media Services

NEW YORK -- In the old days in Wall Street, brokers used to be given the ``stock of the day.`` Now, the report is more likely to be about the ``crook of the day,`` and by and large it couldn`t happen to a nicer bunch of guys.

For evidence is mounting that the unsavory types involved in the widening scandals had something very much in common, and it isn`t what most people first assume.

It isn`t mere ``greed`` -- that gauzy, if emotive, word we so easily ascribe to anyone who makes more than we, in our wisdom, deem appropriate -- but something far more objectively definable: ``contempt`` -- for the ordinary investor and for the process of an open flow of financial information -- the process that gives us smaller fry a fair chance to compete.

The real stars of money management not only have had nothing to fear but have understood the necessity for public trust. When a brilliant institutional investor like John Templeton or Peter Lynch has a genuine insight as to where he should be putting his money next, I have found, he is more than willing to discuss it in a forum like Wall Street Week With Louis Rukeyser -- confident that solid new ideas are enhanced, not diminished, by being widely shared.

On the other hand, there was much less willingness to come clean on the part of the very dealmakers who are now, one by one, being exposed and indicted. Their contempt for public opinion had, as is so often the case, an understandable if shadowy basis: They had something to hide.

U.S. MARKETS ARE UNIQUELY OPEN

What is truly remarkable about the American financial markets is what is remarkable about America itself -- its openness. Historically, there simply was no other place where investors, large or small, could count on so much access to so much information. This was not just good theory, it was good business, and it is an important reason why, even in an era of rapid internationalization, the U.S. markets have remained so dominant.

Hence it misses the point badly to become preoccupied with the alleged ``greed`` of the latest perpetrators. The lure of big money naturally attracts people of all kinds to investment banking these days. But the vast majority operate honestly, not just because of legal oversights, or inherent morality, but because common sense warns that a dishonest market will lose its customers.

Contempt for the ordinary mass of citizens, in contrast, can take many forms. Ivan Boesky, Wall Street`s $100 million misunderstanding, is said to have been a notorious cheater even at tennis, where he habitually served a foot or more past the foul line. Clearly, he felt that others would be too intimidated to protest and that conventional rules did not apply to one of his magnificence.

THE GENIUSES DON`T NEED SECRECY

In Wall Street, there must always be a fine line between independent thinking and contempt. The market traditionally, and spectacularly, rewards those capable of rejecting an irrational consensus. (Look what this great bull market has done for those smart enough to follow the few counselors who strongly and consistently advocated equity investments.)

History abounds in cases where the ``contrarians`` ultimately prevailed. But experience suggests that the true investment geniuses do not count overmuch on secrecy, or on information that cannot be shared, or on contempt for less wealthy participants in the marketplace.

The next time an ambitious hotshot is faced with a career decision that could lead him either to Southampton or to the slammer, he might begin by asking whether it requires him to act with contempt for the rest of us -- in which case he may deservedly wind up with the contempt reversed.